Defence and infrastructure giant Reunert Limited says revenue for its defence group, Reutech, is flat for the first six months of its current financial year at R281 million.
Reunert in a statement issued this afternoon said Reutech’s operating profit is down 23% to R50 million.
Reunert chief executive Gerrit Pretorius is however upbeat on Reutech`s prospects for the full year and described the first six months as a period of preparation.
Deliveries of unspecified “significant contracts” commenced in the second quarter and are now in full swing.
“Favourable exchange rates have been locked in for the remainder of the financial year. Reutech is expected to perform well ahead of last year,” the statement adds.
Pretorius adds that the radical deterioration of market conditions since the end of last year has had a negative impact on the interim results of the total company.
While Reunert Limited`s revenue increased by 1% to R5,1 billion compared to a year ago, a steep decline in volumes, particularly in the electrical engineering operations, resulted in operating profit decreasing by 27% to R531 million.
The lower levels of activity and prudent cash management resulted in working capital decreasing with a corresponding increase in cash and cash equivalents to R962 million at the end of March, the trading statement adds.
Strong growth of 69% in net interest and dividend income coupled with a lower tax rate, limited the decline in normalised headline earnings per share to 16% at 232 cents per share.
The interim dividend declared decreased in line with normalised headline earnings per share to 65 cents per share (2008: 78 cents per share)
Pretorius adds that in difficult trading conditions preserving capital is essential. “The era of the balance sheet has arrived.”
Reutech consists of Reutech Precision Products (RPS), Reutech Solutions, Reutech Radar Systems (RRS) and Reutech Communications.